Sherwood Brands Inc v. Pally Holland BV ( 1997 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
SHERWOOD BRANDS, INCORPORATED,
Plaintiff-Appellant,
v. No. 95-2847
PALLY HOLLAND, B.V.,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Alexander Williams, Jr., District Judge.
(CA-95-1972-AW)
Argued: October 30, 1996
Decided: January 3, 1997
Before HALL and ERVIN, Circuit Judges, and BUTZNER,
Senior Circuit Judge.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Albert David Brault, BRAULT, GRAHAM, SCOTT &
BRAULT, Rockville, Maryland, for Appellant. Niccolo Nunzio Don-
zella, SHAPIRO & OLANDER, Baltimore, Maryland, for Appellee.
ON BRIEF: Daniel L. Shea, BRAULT, GRAHAM, SCOTT &
BRAULT, Rockville, Maryland, for Appellant.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Sherwood Brands, Inc., appeals the order dismissing its breach-of-
contract action against Pally Holland, P.V., on the basis of a contrac-
tual choice-of-forum clause. We affirm.
I
Pally is a Dutch company that makes dessert biscuits, and Sher-
wood is an American company that distributes the biscuits in the
United States. In May 1990, the companies entered into a contract
making Sherwood the exclusive distributor of Pally biscuits in the
United States except for certain areas in New York.
Claiming that Sherwood was not paying its bills on time, Pally ter-
minated the agreement in February 1994. In order to resume business,
the parties entered into two agreements--"protocols"--to govern their
legal relationship pending negotiations for a new contract. Protocol
#1, which was dated May 16, 1994, expressly noted that the "existing
contractual relationship"--the 1990 contract--would govern except
to the extent changed by the protocols. These interim agreements pri-
marily dealt with letters of credit to be established by Sherwood to
guarantee payment for future orders. Neither protocol mentioned
choice of forum.
In the spring of 1995, things began to break down again, and, in
June, Sherwood filed a complaint in Maryland state court alleging
that Pally had breached the 1990 contract by allowing other distribu-
tors to operate in areas that were exclusively Sherwood's. After
removing the case to federal court, Pally moved to dismiss on the
basis of § 10 of the 1990 contract, which provides as follows:
2
Governing Law and Disputes
a. In case Sherwood decides to start a legal procedure
against Pally over disputes between parties emanating from
this agreement or being connected therewith, direct or indi-
rect[,] these disputes shall be judged by the competent judge
according to the normal standards of competency of the
Netherlands.
b. In case Pally decides to start a legal procedure against
Sherwood over disputes between parties emanating from
this agreement or being connected therewith, direct or indi-
rect, these disputes shall be judged by the competent judge
according [to] the normal standards of competency of Rock-
ville, Maryland - U.S.A.
Sherwood opposed the motion on the grounds that either § 10 was not
a choice-of-forum clause, or if it was, negotiations begun in 1993 had
resulted in a superseding agreement as of March 1993 (of which the
two protocols were subsequent short-term arrangements) that con-
tained only a choice-of-law (Maryland's) clause but no provision for
choice of a forum.
The district court ruled that § 10 was indeed a forum selection
clause and, further, that "the 1993 so-called agreement was at best an
agreement to agree. It was a proposal. It was a draft."1 The court also
denied Sherwood's motion to alter or amend judgment, and Sherwood
appealed.
II
We first address the district court's ruling that§ 10 of the 1990
contract is a forum selection provision. "[I]nterpretation of a written
contract is a question of law subject to de novo appellate review."
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1 The court initially ruled from the bench and entered an order simply
granting the motion to dismiss. A written opinion was later issued with
regard to the denial of Sherwood's Fed. R. Civ. P. 59(e) motion.
Sherwood Brands, Inc. v. Pally Holland, P.V., Civil No. AW-95-1972
(D. Md. Sept. 15, 1995) (Memorandum Opinion).
3
Scarborough v. Ridgeway, 726 F.2d 132, 135 (4th Cir. 1984) (cita-
tions omitted). Under the substantive law of Maryland, which we are
obliged to apply in this diversity case, we must"determine from the
language of the contract itself what a reasonable person in the posi-
tion of the parties would have meant at the time it was effectuated."
General Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261, 492
A.2d 1306, 1310 (1985). The district court found the provision to be
free of ambiguity, thereby obviating resort to extrinsic evidence.
Sherwood contends that the district court erred by failing to look
beyond the words of the contract in interpreting the clause.
Though § 10 is not a model of clarity, the term "competent judge"
certainly refers to a court having subject matter jurisdiction.2 See
Black's Law Dictionary 257 (6th ed.) ("Competent authority. As
applied to courts and public authority, this term imports jurisdiction
and due legal authority to deal with the particular matter in ques-
tion."). In view of Sherwood's failure to suggest any reasonable alter-
native interpretation, its argument that the clause is at least ambiguous
is meritless. The clause, then, is clearly a mandatory ("shall be
judged") forum-selection provision, and there is no need to look else-
where to discover if the parties' intent may have been otherwise. See
World-Wide Rights L.P. v. Combe Inc., 955 F.2d 242, 245 (4th Cir.
1992) ("If a court properly determines that the contract is unambigu-
ous on the dispositive issue, it may then properly interpret the contract
as a matter of law. . . .").
III
Next, we consider the district court's rejection of the contention
that the 1990 contract had been superseded. "Summary judgment is
. . . appropriate where the record taken as a whole could not lead a
rational trier of fact to find for the non-moving party." Russell v.
Microdyne Corp., 65 F.3d 1229, 1240 (4th Cir. 1995).3 Sherwood's
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2 Forum clauses are "an almost indispensable precondition to the
achievement of the orderliness and predictability essential to any interna-
tional business transaction." Sherk v. Alberto-Culver Co., 417 U.S. 506,
516 (1974).
3 Although the district court denominated its judgment as one granting
Pally's "motion to dismiss," the order appealed from is properly deemed
4
argument is that there are genuine factual issues about whether the
parties had reached a new agreement, one with no forum-selection
provision.
Apart from the two protocols, which simply kept the business rela-
tionship going by setting out such details as short-term payment pro-
cedures, there are no other signed agreements. Sherwood relies
heavily on a snippet in Koenders' (Pally's president) notes from a
January 1993 meeting about there being "no disagreement about the
content" of proposals for a new contract. However, on May 3, 1993,
in response to a later draft contract prepared by Sherwood that was
based on that same meeting, Koenders wrote that"the legal depart-
ment was not happy with your [Sherwood's] counter proposal." This
is hardly the stuff of binding contracts. Even viewed in the light most
favorable to Sherwood, the numerous writings produced pertain only
to negotiations aimed at a new agreement to be formalized by a writ-
ing signed by both.4 See, e.g., Bat Masonry Co., Inc. v. Pike-Paschen
Joint Venture III, 842 F. Supp. 174, 177 (D. Md. 1993) ("The fact that
the parties intend to have a formal contract drawn is evidence that
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an order granting summary judgment because, in addition to construing
the alleged choice-of-forum clause, the court had to examine matters out-
side the pleadings to determine whether the 1990 agreement had been
superseded. See Fed. R. Civ. P. 12(c) ("If, on a motion for judgment on
the pleadings, matters outside the pleadings are presented to and not
excluded by the court, the motion shall be treated as one for summary
judgment and disposed of as provided in Rule 56 . . . .")
4 These writings include a January 1993 "draft" prepared by Pally,
which provides that "the rights and duties of the parties shall be governed
by and construed in accordance with the laws of the State of Maryland";
Koenders' handwritten notes from a meeting in March, 1993, that note
there was "no disagreement about the content" of the draft contract, but
adding that "the wording was very legal and thereby not always easy to
understand. The principles has [sic] been agreed. Sherwood will work on
a simplified more structured (commercial) draft"; and a memorandum
from Koenders to Sherwood's president regarding"open issues," and
which promised to "come with a proposal for the new agreement by Sep-
tember . . . . The proposal will cover all items that we have discussed.
After agreeing on the content I'll ask our attorney to put it in proper legal
writing. My goal is that we both sign the contract during my next stay
in November."
5
they do not intend previous negotiations to amount to a binding con-
tract.") (quotation omitted); Peoples Drug Stores, Inc. v. Fenton
Realty Corp., 62 A.2d 273, 275-76 (Md. 1948) (same). Sherwood has
simply failed to develop sufficient evidence that the parties ever
reached any unwritten agreement that displaced the 1990 contract.
IV
After Pally filed its motion to dismiss with an accompanying mem-
orandum of law and exhibits, Sherwood filed an opposing memoran-
dum with more exhibits. Then, as allowed by the local rules, Pally
filed a reply to the opposition with even more exhibits, including an
affidavit by Koenders. Sherwood then filed a "supplemental opposi-
tion" that included an affidavit in which Sherwood's president, Fryd-
man, averred that Koenders' handwritten notes were evidence that an
agreement had been reached as early as March 1993, and that Sher-
wood had specifically agreed that the parties' relationship would be
governed by the laws of Maryland.
Pally moved to strike this "supplemental opposition" on the ground
that it violated local rules and that the Frydman affidavit contradicted
the original complaint. See Local R. 105(2)(a) (surreply prohibited
without leave of court). In the complaint, which was initially filed in
state court and which was verified by Frydman, injunctive relief was
sought under the terms of the 1990 agreement. Pally argued that Fryd-
man could not be permitted to contradict that pleading and now say
in the affidavit that the 1990 agreement had been superseded by a
1993 agreement.
The district court granted the motion to strike on the ground that
the "supplemental opposition" was not permitted under the local rules.
Sherwood complains that the district court should have considered the
Frydman affidavit because Fed. R. Civ. P. 6(d), which takes prece-
dence over any conflicting local rule, allows opposing affidavits to be
served the day before a hearing. Frydman's assertion--that an agree-
ment was reached, and that Koenders' notes dated March 1, 1993,
"evidences the agreement"--is nothing more than a statement of Sher-
wood's legal argument, and, as we have already found, that argument
finds inadequate support in the record. We find no abuse of discretion
on the court's decision to exclude this affidavit. See Supermarket of
6
Marlington, Inc. v. Meadows Gold Dairies, Inc., 71 F.3d 119, 126
(4th Cir. 1995) (holding that a court reviews evidentiary rulings in
summary judgment setting for abuse of discretion).
AFFIRMED
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